Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Informatica Second Quarter 2023 Earnings Call.

It is now my pleasure to introduce your, host Victoria Hyde-Dunn Vice President of Investor Relations.

Victoria Hyde-Dunn

Good afternoon, and thank you for joining Informatica's Second Quarter 2023 Earnings Conference Call.

Joining me today are Amit Walia, Chief Executive Officer; and Mike McLaughlin, Chief Financial Officer.

Before we begin, we have a couple of reminders.

and at are investors.informatica.com. release Investor on press website Relations earnings slide available presentation our Our

Our the the IR remarks website prepared will after conference be call posted on concludes.

forward-looking will those from or uncertainties. implied of comments call, differ result expressed be a risks the results may we of During a various nature. as Actual materially making and

XX-K Risk information review publicly forward-looking statements, filings our are recent filings, including SEC required more about information company's most year full law. some as For the today, obligation revise based except our section for of we Factors, titled XXXX. the XX-Q statements to in these no or assume and as risks, please forward-looking and included the update These of on by

non-GAAP to can GAAP in financial of A Informatica's performance on press release measures are these not and and certain prepared GAAP. to non-GAAP measures US in Investor discussing financial in the These be slide website. measure of available addition measures. presentation reconciliation be our Relations afternoon's items substitute found will a for this financial with we accordance Additionally, nearest

that, With pleasure the turn over Amit. my to to call it's

Amit Walia

us Well, by you Thank you, for I everyone call thank start will today's summarizing joining points. Victoria. key three today.

across driven and from metrics, we momentum exceeded First, QX guidance strong by strategy. top customer bottom line a consumption-driven cloud-only

is and believe driving and is own differentiation of AI especially about with innovation privacy capabilities the acquisition we comprehensive without data. that data, of and enterprise further be and data is the product market. all there IDMC unique rise quality holistic the standard no Informatica's management enterprises This globally. our is to AI, governed are management, management most important the put, it's we data becoming and democratization data Simply of in platform for platform the data cloud-native data through our IDMC and which Second, our AI-powered expanding integration solutions, Privitar, for access recent with of

and free strategic And thirdly, the we first growth, our delivering forward flow unlevered adjusted after raising half given initiatives. execution remain year. full operating tax to for our committed the in the of driving cash while our strong profitable balanced with year, income We are non-GAAP guidance

let now more discuss in detail. that, these With topics me

results. Turning million year-over-year, year-over-year mark ARR. growing and growing QX subscription Total record for proud revenue to subscription in a XX% that time. ARR cloud billion $XXX X% of subscription with We grew exceeded cloud cloud delivered the I'm $X.X XX% the one, year-over-year. because that really ARR first

of guidance XX% the and represents is tracking shift mix non-GAAP from XX% to year ARR, the position operating strengthened for prior quarter. macro remained as subscription now ago. cloud cloud income. self-managed from environment of subscription versus end cash We a second ARR our sales The high as The up in beat quarter the expected, ARR stable subscription

XX% a Approximately, workloads new quarter. on-prem in from came of saw uplift customer bookings nice which cloud from the the the with and migration, new remainder quarter's cloud expansion

across adopting are new users and Our IDMC customers new the use for cases organizations. platform

million $X year-over-year in ARR customers. X,XXX Customers year-over-year than to over subscription customers. In to subscription XXX of customers than X% more increased quarter, by second $XXX,XXX more ARR, increased the spending XX% spending

ESG for and sciences This follows customized needs state cases. launches recently use deliver services, social life have insurance, and retail launched support IDMC verticals. CPG and financial for to we government, Now, and IDMC environmental, governance local industry-specific IDMC to and previous sustainability of

banking deliver customers at and in that a aims Western in customer for Australia Let while digital P&N BCU by Wales across me Queensland their Southeast stories. strategy created represented share personalized P&N more with a you and New Bank South to few Bank has Group, data Australia, their for integration, they Snowflake, to with integrity time as their modernize data. protection IDMC complement strategy, the data they transformation to same of customer partnership platform and In catalog data digital analytics data ensuring selected ingestion, cloud. solutions quality the governance and and the Informatica's transformation

including Jaguar changing Discovery with industry Land digital focus data. and the electrification, and Jaguar model, is Range on while The will be Rover, entirely of have Rover will automotive pure services forefront a the Defender at each rapidly company is Collections electric electric. by that a data-driven. more undergoing Master platform Data discovery, and including data Management for supply its use data data IDMC together a operations transformation and digital application see and integration, selected catalog becoming Informatica's will manufacturing They chain, cases, curation with SaaS. quality, strengthened

strategies Solutions, consolidation with and efforts, rationalization. Data transformation strategy. partnership vacation in is family for Vacations ownership and resort, tech company, tech are In SaaS marketing modernization, transformation travel a includes sales which a implement estate, the digital mission and Catalog Inn most travel to digital the be digital undergoing they Holiday with Data Incorporated data selected to Informatica's they and real Club Deloitte, brand loved total Master and Governance joint their Management Cloud

Informatica UKs. solutions. working be And of highlight cataloging solutions impressive of customer stories data adoption and cloud IDMC the provide will across governance the Defense, the Ministry to success with These globe.

customers, and accelerating an Next, May, democratize our data helping our productivity community is incredible on to this and see transformation IDMC's opportunity innovation part how AI-powered cloud-native and year. an in was Conference platform, Informatica deliver User to journey. and partners our World We trusted digital at organization's, thousands of engage, firsthand, to as with earlier It of improve hosted product we partners. prospects customers Informatica global data continue

complexity within ROI immediate I and want the to looking want data had their the and deliver all discussions IDMC. data solutions, on reduce operations they CTOs architecture CDOs CIOs, point simplify They lower TCO. to with standardize and many to fewer

capabilities IDMC. many industry-leading We also on unveiled

AI, which know me conversation I every thoughts of top let on share in Now some mind remains today.

what I sure can we Look, clean, data management, across need begin the value no governed forth. all in managed place, us that IDMC into by bringing Let data data on AI, in, AI all without create of value, about. That's quality to in high to me garbage and so garbage holistic, believe data making at is saying, there is is usable that governance gives there be making firmly one sure scale. of and fragmented out, enterprise it's an so and get

our World, back solutions fact, XXXX AI with new. year. processing productivity ML active transactions launched on algorithms AI is CLAIRE leveraging NLP that our Informatica and is at mission-critical not embedded of in all intelligence AI to as trillion cloud metadata, We journey XX our cloud In of XX drive petabytes already June. connections, now and in event XX,XXX leveraging accessing and metadata the metadata in

and can CLAIRE have on AI-powered impact has our taking it to platform Our And Gen the exponential our record customers allowing metadata to CLAIRE of system transformation are IDMC realize and their AI. GPT, we take AI all organizations. significant with copilot with us the and and a step journey forward amplifying foundation digital forward now,

differentiation from three this in AI comes factors. market Informatica's

enterprise a understanding an vendor neutral able ecosystem. beyond vendors is can claim inventory. metadata that, ecosystem, an the of comes of from First, space. being data to few being understanding at-scale in and an an data and But this have Very which enterprise's independent

scale. vendors Again, working When of of data data on isolation. data capabilities, metadata can is, that capabilities. only management management, of tandem And or And just pipelines think data they training which on project is at quality third catalog management just any, with handful in management ELT projects. don't pipelines data enterprise metadata available all a or of if ETL and these in IDMC. powered requires comprehensive thousands or platform, is, think LLMs enterprises second just only a of do top data from The

this CLAIRE's the as GPT quarter, service copilot now management. preview units, utilizing a help to will simplify and democratize CLAIRE private drive customers IDMC native is available available in Informatica's usage processing data and and be

commitment innovation us have to analysts industry thought and differentiation delivering and product won recognition leaders. focus consistent from and Our

consecutive number Data In XXXX the and IDC's year. Report, for ranked Informatica Market Software Worldwide Shares one, Integration seventh Intelligence

recognized Our data and five submarkets: have quality, data management consistent data track performance and been movement. data transformation, data record intelligence, and dynamic massive ingestion in

pleased fifth Data QX Wave to leader the for time. for be Forrester the named We the consecutive in Master Management XXXX, are

Snowflake our increase, grown continue as such have partnerships hyperscaler AWS, partners to GCP, and ecosystem Databricks Now, grow innovation and as and Microsoft, deepen and product our with capabilities

of Let in announced customers the Native advanced Microsoft, and data of will Azure with data ISV services. With our which service, me provide well. some an management We as availability announced access IDMC seamless give you cloud Azure Azure capabilities, a native, those. we first-party catalog normally glimpse of and Azure for reserved governance as

the announced of a also first ISV Microsoft as integrations preview offering. for of one partners design this with We Fabric, seamless private

With announced the console. partner AWS, directly ISV service data from is Amazon only integration free our the with integration. of user availability Redshift this native Informatica cloud we

reach market in launched PoD AWS scale secured a Informatica in our to also Link We in and that Private Japan launched region. agent

our our EMEA. GCP, announced of the Superpipe native previews the PoD with application footprint the and MDM we integration. of At in Summit, the data announced service and With a we SaaS the public enterprise of for availability Snowflake expansion

service cloud data added free Iceberg new integration via for Snowflake and tables. support Partner Our Apache Connect

migration and Databricks and support a program. support Summit, IDMC for We added Catalog, Databricks power AI Data Databricks to we SQL. Unity At the Connect for center Databricks for Delta added Lake

partner attendance consulting GSI portal sciences. had data IDMC make to partnership ZS' year. with partners platform life cloud this it Turning firm needed for We sales World a embed for Partner global content at expanded record launched to our for the at We a to management levels enablement. Informatica partners. ZS, critical our our brand-new We to easier with Summit find ZAIDYN

X,XXX integration We SaaS BootCamp grow portal. boot the And launch this made here. only more will than BootCamp. cloud from become have and also our on free enablement through And certified camps MDM data all Champions our since people

business digital and moving outcomes. enterprises ahead multiyear achieve see better improve with data to projects intelligence transformation We

our program, We customers up last have from many IDMC. saw and continued to conversion factory to X% over IDMC, at move our of legacy ratio. our GSI progress modernize X.X our X.X% partners migration a helping maintenance with to quarter migrated of We with base

new We are lower on-prem cloud migration customers time, quarter. with we to lower ability make to risk. excited gives modernizing will about this available accelerate program, cost This program and assets significantly IDMC the our which lower generally PowerCenter modernization

Now Informatica privacy brings access and We security and discuss in earlier in let to family policy me to to Privitar the Privitar team our Privitar. strengthen expertise industry management capabilities. deep welcomed cloud skills July.

and workloads governance, to enable through maintaining to data and mission-critical and create data use offerings. data secure This customers offer the security catalog, management and cases to Our shared while sharing vision new data data across control data. MDM allow quality our and IDMC privacy, at ability will customers trusted

its integration the market, single scalability, the expanding efficiency making on product cloud IDMC once of And platform are integrated, data and legacy and progress offerings. become in lead comprehensive our unique innovation the will fully the solution plans. and differentiated good most we platform We believe vendors management point because over

Now year. raise as income thrilled our I'm non-GAAP for free adjusted to pleased up, cash operating and tax flow I after and the wrap unlevered guide

long-term on are growth We profitability durable continued our on for executing cloud-only and while business focusing consumption-driven managing strategy. the

We vendors. scale solution at ahead building and legacy and AI-powered in long displacing a point are runway best-in-class see single platform a

about for partners, excited I our to would us. Informatica supporting I all hard commitment. colleagues continued thank who am thank opportunities our for shareholders and I also future my of growth. customers cloud and work are want their to like

you that With Mike to Mike take the take turn through it me away. call more let details. over to

Mike McLaughlin

results how and across exceeding ARR our QX financial growth the begin Amit GAAP profitability expectations. solid I'll quarter board afternoon, metrics was of everyone with understand everyone. and by Informatica's review revenue. and Thank best good a our to QX key reminding you, the

decline past, going perpetual we into to ARR fiscal and which guided we sell XXXX; maintenance self-managed in ARR in and from subscriptions, which revenue which and we major expect XX% three subscriptions, categories: or actively to full the fiscal forward. sold to longer year-over-year have we on-prem which fall of the guided no year also have XXXX; cloud Our in licenses growth decline

work We also partners to of we of amount revenue relatively implementation our customers. which services earn education performed revenue and that is our for not decline ARR. as a expect as more professional small counted Service slightly services, from year this

added the recurring X% an the through in revenue. walk $XXX increase new I'll workloads new million our Total mind, ARR steady renewal of components in of and the cloud billion, net year. was prior driven year, ARR $X.XX annual We that With rates. versus by prior over

we approximately year-over-year on in total May. impacted expectations by basis negatively million exchange when in guidance $X.X with Foreign a line set our ARR

XX% a subscription million, now and subscription the Turning of of high XX% of $XXX components Cloud a to XX% was ARR. our $X end from above the ago. year-over-year ARR May subscription represents up increase year ARR total guidance. our ARR, million Cloud

drove rates from Cloud and the subscription bookings on-premise from renewal came cloud rate quarter ARR cloud remainder new year-over-year. subscription with expansions, customer year-over-year. cloud New quarter's flat and XX% of million growth retention Approximately the workloads workloads strong was for of new $XXX net the XXX% migrations.

in Self-managed million. and X% subscription as ARR This declined was down expected the X% up $XXX slightly to year-over-year. sequentially quarter

subscription Given our and declines year we expect focus quarter. ARR throughout on new to starting the continue self-managed cloud sales next show declining year-over-year

ARR, self-managed total $X.XX which ARR, than ARR, above Subscription which ago. over sum to year represents billion, the of ARR grew million guidance. simply a subscription year-over-year XX% from XX% is our May of up Subscription of XX% cloud end is $XX high the and by more now

set year-over-year guidance line Foreign approximately in exchange on by our expectations basis negatively million $X.X impacted subscription a when ARR May. in we with

total $XXX of expectations. The ARR ARR. maintenance, to of million total X% represents in was Maintenance XX% is down with year-over-year third line component ARR which

longer a of no meaningful amount we licenses. reminder, perpetual a sell As

As continue a declining constant licenses fairly on at a gradually result, rate. we to perpetual expect maintenance

In yielded These and maintenance of total, future was of ARR. cloud subscription as cloud-only ARR, the by consumption-driven strategy are growth and total growth offset gradual for trends these dynamics ARR quarter, three declines quarters. continue we X% components our we expected these to in result direct subscription in self-managed ARR of which driven expect by solid the our

in growth year-over-year. over good per the average ARR customer XX% a quarter saw to in growing We $XXXXXX, subscription our a increase second

subscription over subscription increase year-over-year. have XX ARR of We customers active XXXX an customers,

X% for decline professional $XX exceeded This lower million, by GAAP revenue strong slower-than-expected revenues revenues. I'd to our of the Now of increase the an to renewals, due quarter. May a like by maintenance services revenue high million $XXX range year-over-year. review were our end partially second results guidance offset total and in

Foreign total expectations. revenues with basis impacted exchange line on $X.X in approximately year-over-year May negatively by million a

away is from subscription and as on-prem expected. sales progressing shift Informatica's to sales cloud self-managed

were the been an approximately we quarter increasing GAAP creates this were this X%. growth new revenue in As versus they year, revenue as approximately I this revenues headwind the previously rate cloud have term. self-managed to total accounting-driven our reported bookings million year-over-year described, of If our in would short than $XX mix last quarter, higher QX same

to million, to XX% ago. XX% increased year revenue total representing $XXX Subscription of a year-over-year XX% compared revenue

Our renewal quarterly subscription due self-managed XX%, to points renewal rates. down X a year-over-year was percentage rate decline in

in comprised professional This lower revenue XX% to revenue of X% services in the representing were $XXX of education services decline revenue professional represented of total revenues remainder quarter. and revenue. maintenance million, revenues this of consulting maintenance million and year-over-year Maintenance representing due total category, revenue. QX. is down than revenues Implementation, XX% the Standalone expected gradual for the and $X

X% growth Using year-over-year our international of international $X year-over-year the year-over-year. million. total would in $XXX approximately geographic quarter, from X.X% have while representing US to revenue the to $XXX of declined distribution been revenue XX% million to revenue revenue year, Turning of last million, grew X% representing exchange greater international QX rates business. revenue

to IPUs Approximately of of IPU-based now platform subscription quarter the are were cloud XX% X and part access percentage total our IPUs are ARR new XX% sequentially. of cloud Consumption-based IDMC bookings points strategy. a a frictionless core up represent second deals. way

IPU new traction is and during expect IPU consumption Our model gaining flexible adoption the we year. to also increase

end gross our I to unless on software results I'd profitability move otherwise to stated. consistent expectations. year-over-year will In metrics. our XX% the May Now, shifts margin to Please that, guidance as was of for note discuss $XX QX range. even mix exceeding non-GAAP like our was growing were quarter consistent year-over-year sales expenses and the the million XX% our with income approximately Operating Operating cloud. high

ago. $X.XX per a was count Net was and on shares Adjusted million Operating outstanding EBITDA diluted shares. was million XXX from XX.X% million. million was XX.X%, $XX point share XXX share improvement a income income $XX diluted net X.X approximately was year percentage margin approximately basic based

quarter-to-quarter working in quite cash unlevered our tax after unlevered other and better be Cash Adjusted based tax capital payments. higher the mind paid flow approximately adjusted other that flow as million. fluctuations can was due and from free cash dynamics. on items cash after QX free interest collections margin million, was volatile to Keep free favorable was cash expectations such $XX XX.X%. for quarter non-linear flow tax approximately in $XX working than capital

the in Net ratio cash investments times. million. trailing ended resulted of $XXX of $XXX second with position leverage debt cash was quarter We adjusted $X.XX strong net short-term a in and billion of months a X.X This plus was XX EBITDA million.

delever months to times our IPO. business commitment expect the of to naturally of XX at which to two by the of XXXX, six the the is below ahead We time end

or are the laid we at out To at year the of year-to-date results, summarize to pleased business. we executed the of our guidance beginning our have ahead across

I'll are full and in cloud-only guidance. tax. free Now, reflecting revenue year continued strategy delivered and non-GAAP income despite to in We operating and QX turn and after line macro economy. previously unlevered confidence consumption-driven results guidance QX for the ARR our issued metrics, for uncertain raising bottom guidance We better-than-expected flow adjusted reaffirm cash

We expect the in the guidance raising not be guidance. immaterial and to both in Privitar Therefore, earnings the now representing XX, it expect million revenue $XXX full December does acquisition we're the of XXXX. impact for follows. ending to be $XXX income With to year-over-year range year mind, approximately non-GAAP this our million, of midpoint. XX% to a in operating increase as at XXXX We

adjusted tax at XX% $XXX million a cash in expect $XXX be increase unlevered to of approximately after representing range flow now to We year-over-year free million, the midpoint. the

the release our the in this press guidance year find can full of we afternoon. filed You details

mentioned, the issued year. ARR previously revenue are our reaffirming and for we full As guidance

third the for guidance Next, turning quarter. the to

self-managed continue cloud. net sequential in decline to on basis. ARR expected, from our revenue cloud Therefore to new while expected steadily. And we the will sales to new QX, expect and year-over-year ARR both expect subscription the to continue and We is grow shift ARR maintenance as net to self-managed decline mix to

establishing for mind XXXX the as follows. this quarter are With guidance we third in September XX ending

expect the $XXX midpoint X% of of We to total GAAP approximately the range million, the to representing $XXX million at revenue in year-over-year growth range. be

expect of representing the the billion billion at be midpoint of approximately We to $X.XX XX% to range growth subscription ARR year-over-year in range. the $X.XX

$XXX ARR in growth XX% million of We of year-over-year to representing the midpoint at approximately cloud $XXX range. to expect the range be million, the

million, the of $XXX $XXX in midpoint operating non-GAAP range at range. representing income of the expect We the to growth year-over-year to approximately million XX% be

I modeling to additional few a of more would provide pieces like For purposes, information.

expect First, cash for flow tax the range the of to to we adjusted free $XX million in after unlevered be third $XX million. quarter

third Second, approximately the full we estimate be the cash estimate approximately for be for $XXX interest will year, million for in quarter. cash interest million. paid And will $XX we paid

with year and was we respect non-GAAP taxes to continue QX rate rate expect taxes income full year XXXX that full Third, the million. tax XX% $XXX be approximately to We to estimate cash XXXX. for our

provision basis expect our to GAAP significant of continue. rate a the volatility we On income and tax

For line assumptions. tax. in expect a year count lastly, provision the GAAP cash with we share tax And XXXX, our full our

quarter weighted to and third approximately XXXX, shares average million million basic we expect be of average XXX the outstanding shares For shares outstanding approximately XXX to weighted shares. diluted be

XXX shares we basic million full outstanding year weighted the to be average weighted million For shares and shares. XXXX, outstanding XXX shares, diluted expect approximately average be approximately to

hope inaugural of Tuesday to rescheduled you Xth San to that I before can Francisco. us many announce And our have pleased person. that Q&A Investor join we in session, December starting the Day am We finally, in

you the questions. line can for Operator, open now

Operator

Absolutely. Matt RBC. Hedberg first comes [Operator with Instructions] from Please question proceed. Our

Matt Hedberg

the stability maybe month obviously the double good to more. questions. of a the bit is perspective quarter first of of start sort just the and you of is what towards like kind that continued my sounds taking QX? saw little from some stable for Kind Could kind just Maybe hear. a it of despite on about talk macro clicking still Thank to Maybe end you trends that a fairly which results macro of seeing uncertainty? you're some of

Amit Walia

that We to we good that was QX the year. similar Matt, as think anything would to you. when like say Hey, fashion. from July pretty entered -- compared I stable. or I a didn't we Yeah, And said anything in I see like hear say would I saw

I environment the that, anything it stable. it's think stable. I significantly it's wouldn't say or So pretty improved has

feel be. are we the half we feel – I year where second about hence, would where we of So think and we good where the think

Matt Hedberg

Got your little But on GenAI following into Could in talked how and copilot Just from kind that you more events CLAIRE about it. assumed like effort monetization be user this obviously we a -- And about you growth? products this to much expect probably and then CLAIRE obviously of these haven't GPT. call talk you do some estimates. should either in you year think flowing calendar about a of XXXX? bit

Amit Walia

Yeah.

you so when the web think of want of worldwide I think enterprise that's really take different today from from I put how it. to enterprises because and Matt you thinks can on go consumers different and But think you is ChatGPT it do. whatever it do an

across the undervalued is was the term conference think I phrase term. in -- since that And I've thing -- most traveled fact globe this the would I well. I I in as overhyped the short the use last long GenAI tremendously if the say in few months in In

it's around conversation figuring how I it. governance their And and that in fact first out do is a do are privacy think the I in case question implications if you then mind what's topic is everywhere. Everybody third enterprises the So everybody's begin? use second then,

marching think implications use the figuring architecture So around I out everybody the that it. path, reference is cases, is down the and

I think enterprises. a in XXXX that for I general see thing as

happen. Of starting are to course, things

cases creating will use will to out We have their-end. more enterprises But be using going value customers GPT XXXX. -- for things CLAIRE be preview in and are at it figure proper

Matt Hedberg

Congrats quarter. Got Thanks guys. lot a it. on a

Amit Walia

you. Thank

Operator

with from comes Macquarie. question Please next Havemeyer proceed. Our Fred

Fred Havemeyer

Hey. Thank very much. you

which coming on here. the something CLAIRE wanted question you pipe AI bit I is a product follow-up to really with think, Generative topical exciting a out GPT I see on related, but of the directly not

they're where enterprises perhaps to to Generative how adoption key are And help way governance seeing adopt any there like, over layers your the is data? especially to enterprise data, just or of AI? trying AI Generative can trying problems struggling? What Privitar address, generally generally, add their they ability like But with you are own are that

Amit Walia

Yeah, Fred that's a great question.

we give you a I'll think disburser. of premium cases. that about I large two some have is think this And use example healthcare examples So there One are way issues.

their that a And massive sure right rates a with improving that. high-XXs making if And side rate gone a approve also that a claims playing producing much customer they if And they I opportunity Think customer claim. the revenue improvement a approved. productivity. whole around low-XXs they're experimenting have a that reject There's return as as think and bad about issue, get efficiency claim. or from actually they're for there's or leakage in claims basically bad their that the context revenue data as that's to

think build an how hand, you underlying about high-single frameworks improvement good other digits high-single go large digits digits. churn on the quickly with that context simple campaign campaign or can -- so data can your of the quality top can the in or of whether to infrastructure e-mail it's about campaign help and understanding basically a maybe from very of brand thinking you On when low-single are your customers it GenAI

happening use are cases And are the customer customers management office that's emerging the them things the we the customers that see We're are I first seeing to speak do. of as where talk case way that's all by cases. happen. rapidly. in all as we that I are will across using service enterprise seeing where where -- Those use front an first very they

Turning stuff and GenAI can world for in to issue for the comes, a hands think it in as it the many give issues everybody biggest so Privitar, -- challenge. GPT looked enterprises if they creates the boy, all I CLAIRE democratization one but governance at of for our the put is users democratize -- of biggest

a of an by in person, And important. to right the information, IDMC Privitar -- We lot help to across very and the data became saw accessing those will many, and enterprise. case access embedding large further right customers many, that users them and allowing use that's them where management the accelerate solve use right problem IDMC trying many

a access governance becomes So management part privacy. and very fundamental of

So we as accelerator. that see an

Fred Havemeyer

you year-over-year almost follow-up just much was growth really Thank transactions XX% -- month. processed, for and trillion month you're XX seeing cloud are that here being the per that very translating that. per And rise impressive regarding a the now in Excellent. transactions there's it

love or momentum. just IPU context in It consumption just have to overall in progress your some with something cloud? IDMC Thank substantial generally cloud doing rise you. how Would seems to around transaction get related to in this you there volume relates customers the and more Is just your a that like model lot platform?

Amit Walia

cloud new the Obviously, sales platform. All above, by see ultimately, the, our all are net are of look using driven IPU. customers who non-IPU also before

workloads more want cloud. be what So And number what It's absolutely higher-and-higher. in our basically it both. That's running is. of that its we course customers to that's

workload that's continue to fact, customers a usage. be you workload and that growth And more In that number than are means we IPU to usage tells more higher operational running usage and see even our obviously that ARR thing. more good ahead

we lot So to attention indicator a a that. and that's pay great close of

Fred Havemeyer

you. Thank

Operator

question from -- Wells comes Our Andrew with me next Nowinski proceed. Dowinski or Fargo. excuse Please

Andrew Nowinski

Thank you, the the I on and good macro. congrats your go back afternoon, to to nice on wanted quarter. comments and

number of prepared QX said, in said, And here. remarks it heading you remains you a times I stable. the pretty also into looks stable think it

not enough in year? into annual your you beats the roll what guidance to saw that trends you So QX concerned through for the other

Amit Walia

Andrew. Sure

as wing think, was I said say didn't I the stable. there no and if I tomorrow. opening first spending that everybody is

seen a closed probably I don't So to We're you've Look, want be we calls prudent of almost earnings I I first X.X good doing get years. half. think think got company. thoughtful We thoughtful. and to ourselves. we've -- ahead been very for

step I other half. performed we half did think somebody that in well. second derisked can on than And do think second "Hey, a that teams had how second is expect hand, you've think asking half? question, the the We just the I the bigger basically is derisking of very you I first what direction half, the

transition of year. half big First a

I our come. continues think to we -- strategy

We believe allows to fundamentally that half the actually way. XX navigate overperformance world on that change the assuming doesn't the second top us the good a or bad in

actually transition But way And many in repeat almost at checked null it happened how how companies the line look transition have many at of was accretive I the have time that a cloud same I the set. right? world Last bottom that cloud happened? this

of how overall bottom model about and strength raising we line show that business feel strongly is a actually are our the So us executing. we very

Andrew Nowinski

That you, Amit. sense. makes Thank Okay.

Just a NRR. total very want that to seen range was on Cloud XXX%. coveted I'd follow-up dropped I subscription level below question. maybe clarification that historical to but say a XXX% we've NRR maybe get down just the the consistent within NRR your

So, overall you to the just XXX%? more on provide NRR can maybe any what there subscription color to down is drove drop

Mike McLaughlin

It's subscription not We're Yes. the selling weighted the at a selling Sure average because on-prem customers. on-prem amount. we're funnel self-managed, of existing of retention impact new meaningful least top on-prem Andrew. the in i.e. the just decline not new not to into anything

at net below fall retention some our So, to rate XXX% point. is going

going our rate. to of is trying on blended also the to plan. basis percentage next as but on to impact And going a And you guiding total just on you as quarter basis expected we've total quarter-over-quarter very decline or it's a very, could to totally year-over-year ARR it's we're all that the Exactly basis. begin clear mean in both be I subscription

Andrew Nowinski

Yes.

saying? lose So, them didn't didn't that is customers sell new anything you those just what you're you

Mike McLaughlin

you some there's of in normal selling that's in rate. churn subscription you retention churn. without if take get a any In how it Well, top net on some degrading base you churn new of any course. have period there But

Andrew Nowinski

Okay. Thanks guys.

Amit Walia

us down broke that he Mike growing said And ARRs That's well three the Andrew as the I very focus for cloud on number. think number. the only

In fact that's number that's growing one. a a

dynamics basically Ultimately, one of that's of average the for all Rest a weighted cloud cloud out that's gives. you becomes The the this average giving. all business the are NRR why that diluted. Cloud year we called of earlier the basically is rest whatever see business. mathematical to

Mike McLaughlin

We're in it. because becomes way you that is not when put selling what to net rate asking into. metric But part you own another stock. Yes. you to in about of about yet this ignore the you're And meaningless maybe everything think business a a the rest to buy of retention not cloud

new maintenance for we're It subscription our net becomes happening don't the rate perpetual of just not maintenance retention churn We in business. both what's selling self-managed because part the you about licenses. in that's give and

that NRR to the is So, on meaningful only focus cloud. make Does metric sense?

Andrew Nowinski

it you. Thank does. Yes,

Operator

with question Our Zelnick Deutsche Please from comes Bank. proceed. next Brad

Brad Zelnick

the on see the in profitability Thanks I It's really to good to the see the Great. and business much. guide. cash it's wanted progress you to great ask about Mike so which stability flow

the I components think talked year? capital. you about get that Can full you double-click working you all from for various raise us just benefits to the

you. cash maybe think better trying year is that should guess I understand we then for Thank we Cash what as out model flow? don't. example. really And taxes to the repeat things I'm about things that and free maybe What for

Mike McLaughlin

Yes.

about cash when that think unlevered and our and year takes capital with and to quarter-to-quarter about basis rate you wouldn't yearly puts that things themselves so I And there working a free in year. cash versus out the you smooth thinking on said any tend you're days being and taxes the cash different forth like this see to flow terms tax of encourage out. in dynamics So, all cycle

free as guide more unlevered collections cash are by But change. flow quarterly operating the The how of those raised sorts income. No payable really we see quarter. in by amount fluctuations can same given non-GAAP things or you real our we the year-to-year less a days dynamics raised

Brad Zelnick

appreciate I motion? this? we're of still are the IPU-led the And for but cloud-only adapts how Amit. what adjusting expect reps to you happen of know journey? and help. comments and any in to just along terms I just as it maybe sales shifts field that kind What's maybe remains as well to that And tracking into Okay. maybe you'd

Amit Walia

we second Brad have Yes, full well. half. half is and Obviously, I shifted first think the team very has first half

would I'm with how field and think I that. I teams the run have pleased enthused this say taken and quite by

I As anything very with were obviously we simplification any thrilled ready team to it. is year gives But if settle time this, this have in actually I a this said simplification of gone has been to some this. actually, for think earlier, down the lot but enablement takes

goal make be So, I we basically think is we this there seen. that our all and so with are this far sure accelerate to to sure And so good do year the it. results to make things go forward

So it. pretty good leading I feel about how sales with the teams are

this our I model, further also the as -- also, simplification before right. said to as of that the think I we business And and have see Mike continue

we go think room much much we more company about overall at sure we become to our -- there as continue cloud-only there -- company more further the simplify a parts more to and more faster is I think we continue accelerated pace. basically of to and and to other make are over

Brad Zelnick

Great. much Thanks for my so questions. taking

Amit Walia

Absolutely.

Operator

Next Alex Zukin from Research. proceed. Please is Wolfe question with

Ethan Bruck

Alex you just wanted This Thank little different of Matt's budget of bit to of a towards guys. quarter. if bit end I a just the shape taking question. the Hey, talk And to the Can you the for Bruck unlock little ask began is question Zukin. just you for Ethan the quarter? saw on a way. about

AI. a you and then point folks just rate people anything consecutive like consumption of so just wondering probably cloud quarters. could the visibility spend has migration And change was two driving to interested whether migration, wanting the if like that's I more little activity, that it's IPU around accelerated in better

expectations? to is Just curious your activity performing relative that how migration

Amit Walia

in think And I put an I lot these that can to those the say, said operational sure workloads at workloads. pace. the are a that of needless to is accelerated migrate effort we operational migration make migration,

tech, services our we obviously create led own with to playbooks. Our own

partners However, it. we're with go I talked how about enabling to lead

process, simplification further of happened things has of time. those enablement partner the take Some migration all

think all over I about. period of a and time. It And that can very good gradually fruit, compounding see are feel you effect. It's I of they bearing snowball a starts. starts that

this the that next another fact direction. step migration what in will that is out innovation fall technology come later launched In we

to continue that. we see So

are faster, at reality we've cloud, operational workloads. our basically Look workloads They know is are work they the they know customers the running end a They industrial-grade on-prem of on look at that charm. When the that more day, capabilities PowerCenter. like these to and lower just We journey have been see go continue there. over on to more to front they're those this and focused very one. maniacally excited that to cheaper risk and and a make lot our

those fruit. So, efforts are bearing all of

And there. get said, land look customers I've in workloads once if you run to mission-critical nice the subsumed other workload cloud, over always the have there,

to period out with you workloads, time. begin nice wiped you a If over get have

So, consolidate land have things think, tremendous then other an enterprise. these I across we we that to runway many running are

Ethan Bruck

you're trend think the where seen Thank to you're beginning you've any get you. the a cloud appreciate I XQ the very makes just worse you. there's in Got in think NRR know And sense. curious about been embedding I way trends? if things the just to cloud I guess That for And in in macro quick curious can has ARR what XXXX. to throughout what I'm back terms of just that? can prudence think a then if guidance. you just we little about versus about factoring follow-up. stable basically guide a half? said in downtick how like the directional

Amit Walia

better assumption guide, worse. I will nor is get think on our the that neither world the simple

whole I started a I of remember, were guide. a months banking And a it. we -- it couple talking remember that get when happened and gave said talking would when we couple we ago, it get everybody many of think, holding thought has you we we're just worse, here look were better? months if when the banking we would then ago, all And crisis

context and nothing gotten say, enterprise in spend. stable in better I Enterprises has So I I of also. artful think materially gotten cautious nothing worse. see when the stable, Well has still remain

up think me I second think is myself making walking ahead don't executing that I will and something it is of the a turning think And us it to very into better non-prudent get better -- showing is I half. assume and be around here. of what lot

we're think not assuming. I what that's

But And in the we'll and share how keep When take let's are are meet here for more. that saying about executing. I things now and good the very first context, and half line. later second top a we're where thoughtfully we feel half carefully to guided continue the derisk in months and watch few overachievement we for we

the question, NRR forgot. as up sorry, know NRR, And if I right, you and always down. is NRR

every quarter. guide never to can You NRR

first-time are that acquiring cloud customers know, cloud that right? all NRR we can new accretive cover under the have grew, to NRR. because be You flat of could although lot not been a

NRR, customer remember new in basis of -- I'm as look quarter-to-quarter one-year the ,we think cloud a too this cloud long invaluable a with If get a I because it's said for customer caught number, we basis. NRR, we we in customer it it, don't still when ARR an going. at to shared So holistic you to take up we is zero me. getting a as additive cloud On

So at way. it I that look

the -- much. NRR on quarter-to-quarter on up a get caught basis wouldn't I cloud the that on So

Ethan Bruck

again. Congrats Thanks.

Amit Walia

Thank you.

Operator

Our question proceed. Pinjalim JPMorgan. Please Bora next with from is

Pinjalim Bora

One questions. Thanks Great. taking question for more the guys. Hey, philosophical on for you AI.

there's there people between to developers is time? -- Python think science tussle the want Databricks. which is between of when the tussle I a to open an a to to power How kind like a doing kind investors, comment. Databricks, when Informatica wants I Informatica that And are companies a plays to things. also scripts and of do talk But tussle with APIs, talk on customers bring in said, IT who people right place about of of One over of it we of customer’s seems itself lot top write which putting of use is your spoke you interesting out like a data who lot of

Amit Walia

anything is I and a unique. actually talk the you ourselves in like position as think power, that actually at our they I what are we Pinjalim, with of put So because platform doing look said very tussle. that customer obviously to never we a

of Look and a We all or philosophical is you is answer. a the everything. question, ask live tech overlap very me in always We give I'll with anything the all somewhere tremendous other There a -- there world a of slight in opportunity. you big have a amount TAM. philosophical

there right? in is I overlap you'll an always is some that a industry has say they just security look I all Databricks at this but area way would entire I find it Microsoft, partner. the overlap. think some -- in So great that exist,

the IDMCs about Lake customer IDMCs, with lot are leveraging shared You We the the is -- Unity, House. moving a saw integrating to their migration Delta Delta workloads, SQL, Lake Lake what I going doing of

such that's So like workload going tremendous be got is I Databricks when also Delta There I a look have where there always cataloging, at it and House have corner such competitive that to to our governance, I with have do. Lake. look but being Lake of at world we have I case as big part I so may is That's have is feel not written is because TAM more. but much I somebody TAM, to Azure MDM, do. the I then competes technically the a Arguably, competitive stuff so super to Azure Microsoft true. much

say partner. in great that's live right? the I would there we'll to broad look So a question world, at So over answer asked they much they're just a see world but philosophical you the a I how back

Pinjalim Bora

Yeah. understood. Yeah,

cloud, ahead question Obviously selling you ARR. ago. expecting. came kind year wrong. leaning Maybe in But a self-managed. where cloud on I adding looking when be new it no are ARR. people were versus ago amount at you on same that's year you're you net new of like But the on seems on was versus of as thinking I'm more it's Should It a think a you in added I like net One a this thoughtful basis? seems answer. cloud longer

Mike McLaughlin

performance. third year XXXX how as can guide, be XXXX will that's volatility makes a as one see from it. quarter our another that Yeah, as quarter extrapolations we're dicey to you little this And back-end on basis from yearly at and was. looking QX loaded of a Quarter-to-quarter versus was draw

bit last year was it than a basis, loaded little back-end In a fact then. on even more NAR

the the expect our and of what journey. rest unfold it's what So see pipeline, the in that for go-to-market basis for year in announced upon stride high NAR based we've to the the going maturing the the how and year, And yes in upon products we cloud-only third now a for we're grow in on we of to based we have and quarter we confidence cloud see hitting full our sure.

Pinjalim Bora

you. Thank Understood.

Amit Walia

Thanks, Pinjalim.

Operator

Please next comes Bank from with America. question Our proceed. Koji of Ikeda

Natalie Howe

my Howe on taking Thanks good for quarter. made Looks to adjustments is Hey, for Koji. Natalie execution the like sales question. pretty We wanted ask in any was this you have of you the can that or provide more will to efforts year? color have strategy, through the close go-to-market what end see help the on in helped what and increase Thanks. rate

Amit Walia

the to I goes cases we orienting value Obviously transition of a we has to work would it customers resonate one Natalie, that. there's on the obviously use all sure for down focus good think And, is this above I this sure obviously, on done that's lot. area lot. going customers And appreciate things enterprise making a make that that have of that lot for them. generally I say a to use new job right plays a that creation towards our model tremendous obviously where effectively. other commercial a the and IDMC cases team

CDOs some cases budget. they have And in influence. some value prop In towards CDOs, don't going cases they our if on the focus the CDOs because big even direct the have a have

between maniacal go-to-market all So organization focus our those a operational and of on -- things our in execution.

I see healthy think we Mike pretty create create. mentioned pipeline pipeline

fruit. And and right of those things in a of I like now. big heads is all on have half team think think second down us I we, focused the obviously, So front are bearing that

Natalie Howe

Awesome. Thank you.

Operator

Guggenheim. with Howard Our next comes Please proceed. from question Ma

Howard Ma

the to plan. actually some hitting Amit, responses. your Thank see on of according previous great to team and building you,

is GenAI So question my -- on well. on as

come? for Given in training are quality, you models they to are to the product or these importance building and and governance, data ramp data see ML privacy AI data conversions including starting SKUs, a still of to GenAI, pipeline specific

I case It's not just right? the data realization maybe -- able investments unique could as control, accommodating guess what integration end Thank to that are or justify barriers I just need out maybe Informatica's are not right? not trying help -- some What guess, you. constraints such might make But to wonder position related I the term? in other barriers out of to adoption be your and how in We you was words business to is, the sales enablement. figure against of near the budget is? And or hard cadence can't really be the intelligence. happen argue additional on demand but it's does and your to be being might -- question them because if there there So there in

Amit Walia

And values Absolutely, from do Europe I absolutely I Informatica do is like post -- on that would was that second all two as absolutely Howard, for get GenAI. -- it us the they things now said have get when the No they enterprise on actually different use can customers one want what's hey, with platform. they customers way multiple I traveling think that after so case, think the across what's I first I cities was the that US I -- in there, obviously, World what's as dialogue well. the -- say when this and was with a are they the fact use working comfort literally no all I in They are case, how architecture? right feverishly And us. Howard.

a And opens they are and to for So door it wants in has us. our second feel like customer them in a starters the in technology AI. invest dead for is fact, those teams up because end conversation when nothing all sales no it's where

for do a as they're do point work into pipeline, project if creates deal conversation say the that let's a first it they can example. project. next with closures. their the us which even GenAI great it they do -- platform, a term they AI becomes Lake know House But short to So an trying maybe That's leverage on how starter, all that on our makes have us in that entry to nothing as has

come it's customer dead to end. not that month to a when the something they January they're is Even in when go going a if project, do of to they investing in the want but August us GenAI not know

that's shaping just and up things the end I in cases and GenAI happening. lot complex that you use us. point All I The of shaping for and those how the is of being opportunity XXXX. are said are made of look see as will grunt individual enterprise-wide cases farming the in see those And a out on I all user them happening mode use up take

Howard Ma

super we long quick established and guess pipeline because on call follow-up a I I I So those you really Can are in for increased comment you asked just conversion seeing data a specific data privacy SKUs your that or I question. think for quality, do back you governance our or like is -- the data and that all that it think need it but this XXXX? maybe good for today, models, privacy and GenAI right event of research is through quality and it more governance half manifesting

Amit Walia

Absolutely.

half and data that -- first to and honest very, when the be think enterprise full Privitar capability quality data happening then because access acquisition about half GenAI also journey think that us the I in second is or data very very privacy So is lends us specific data in to in management. that you world nervous even governance fast-growing question. and very and was the AI democratization for for getting of And

So that in very that much context. acquisition was was centered that --

Howard Ma

Okay. Thank you.

Operator

I in questions. your management any closing team There will the pass no for are so you remarks. for waiting longer queue, Thank questions

Amit Walia

that, flow. that cash not be both. profitability as I success. Well, by unique my easy, our call proud but easiest perspective have very, was There mentioning to not Andrew companies to business which of few our thank we transformation, cloud model when joining but also more Transformations That's today's you couldn't not of our we business, hard you. I appreciate asked takes been in are are. able cloud is do a are everybody doing wrap I continue the know many up innovation-led to very, on very look just what while question. are growing and the Well, And and we want our only sharing growing work, Informatica necessarily where I as Look lot of today. accelerate

is management choice the launched couldn't that IDMC XXXX. strategic working we've AI globe more had building a back platform our we IDMC data the our be CLAIRE has enterprises on thrilled by by to of powered across I because make AI for all our be and powered that. long-term CLAIRE focus Today, tirelessly which platform and become And in IDMC for

ahead couldn't you us I a proud have us, of team everyone. work here thankful lot bringing of We of year. Informatica the Thank the but more and for to be middle

Informatica (INFA) 2 Aug 232023 Q2 Earnings call transcript